Buying raw land can be a very fulfilling experience. Seeing that a piece of nature is now yours not only fills you with pride, but provides with you a number of other benefits. Buying raw land is a very smart move financially. All across the country, especially in rural areas with small populations, reasonably priced raw land parcels are available for purchase. And it’s a pretty good investment! If you buy the right parcel of raw land, it will continue to appreciate. You won’t have the stress of a fluctuating investment that you experience when purchasing stocks.
There is also a lot of earning potential that comes with developing your land. It can be a house, a hotel, farmland or a recreational facility. By developing your raw land, you can increase the value of your land by three to five times its original price. But this can only happen if you buy the right parcel and develop it properly. Here are a few tips for buying and developing raw land.
1) Be aware of the drawbacks
Investing in raw land can be of enormous benefit, but it also has its drawbacks. It is not possible to depreciate raw land, and while there are some tax advantages associated with raw land, these advantages are few and far between. Another important thing to remember is that any purchaser of raw land needs to be in it for the long haul. Even if you start developing it once you buy it, it may take a long time for you to gain any profits. You aren’t likely to be able to sell it quickly. And if you do eventually sell it, there is a risk of losing money, which increases if you do not fully evaluate the parcel before purchasing it.
2) Thoroughly investigate the land parcel.
Before you purchase raw land, make sure you get all of the information you can about the land parcel. Walk through your potential land purchase in order to locate ponds, trails, fence lines, and streams. It is also a great idea to take photos of the property to refresh your memory later. Make sure to find the boundaries of your property and to look for any signs of hazardous waste. It’s also crucial that you research the area that the land parcel is located in. Speak with regional development agencies to get any information you can about planned roads, building costs, utility extensions, or development forecasts. Research whether the population is growing or shrinking. The more information you gather about the land, the more likely you are to make the right decision. And you’ll be spared a number of negative surprises in the future.
3) Consider the factors that affect value
When you buy a parcel of raw land, you hope that this will ultimately bring you profits. One way to gain a profit from your land is to sell it after developing it. While the value of your land may partially depend on the way you develop it, it also has to do with other factors. One of these factors is the shape of the parcel. Make sure to view the dimensions of the property that you are considering. Another aspect that affects value is of course the location. The best parcels for development are corner lots with easy access to roads and parking. Also to be considered is the level of access to sewers, natural gas, telephone service, drinking water and electricity. Trees and streams can add a good deal of value to land as well. Making sure that your land has good value is extremely important.
Buying raw land is a big decision that involves a certain level of risk. It could either be very lucrative or it could flop. Make sure you take all aspects of a land parcel into account before purchasing. If you do your research, your raw land development endeavors will be a huge success!